TierONE Capital Market Update

Given the potential impact of the current economic situation on the property market, we have undertaken a detailed review of our current loans to ensure that their performance is not likely to be affected.

Our assessment has been consistent with our existing robust loan management process, to establish if our current loan positions may require more active oversight. Following consultation with our internal credit team, and utilising stress testing parameters on timelines and asset values, we are of the view that our current loan investments will generally continue to perform within terms set out in our documentation, subject to underwriting risks disclosed to investors in the product IM and individual supplementary IMs.

Our review highlights the following:

  • All of our loan investments are secured by registered property mortgages, (predominantly first mortgage) together with other loan specific security arrangements such as director guarantees.
  • We have assessed the loan portfolio in line with broader economic research around any anticipated fall in property values and we remain comfortable with the level of gearing (LVR) against underlying secured properties.
  • Our construction loans have continued to perform in line with expected drawdown schedules and work on job sites has continued uninterrupted to date.
  • Where loan exits are contingent upon the sale of completed dwellings, we note there may be a risk relating to pre-sale contracts with buyer’s individual circumstances rapidly changing, alongside tighter bank credit conditions, as we approach settlement dates on loans. We will continue to work with our borrowers to pro-actively manage these settlements on a case by case basis, if necessary.
  • Our review of our borrowers suggest that they remain comfortable with their risk positions in view of the current market conditions. This is consistent with our key loan underwriting criteria of backing high quality sponsors.
  • We believe that there will continue to be high quality loan opportunities available for investment funding. Loans will be assessed individually in strict accordance with our credit policy and underwriting practices.
  • At this point in time we have not been approached by any borrower regarding repayment issues or stress.

Our loan underwriting continues to adopt a conservative approach to achieving risk adjusted returns commensurate with current and foreseeable risks.

We are currently assessing a number of new loan opportunities and will continue to communicate these to investors. In the meantime, please feel free to contact us regarding any further questions in relation to the above.

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